Assessing the microeconomic effects of public subsidies on the performance of firms in the czech food processing industry: A counterfactual impact evaluation

Abstract

The effects of European innovation and cohesion policies are very uneven throughout both regions and industries. Moreover, there are often only descriptive impact assessments of individual programmes available. In our study, we respond to this issue through the empirical analysis of the effects of the EU public policy on the example of the Czech food processing industry. We assess the impact of the Opera-Agribusiness. 2019;35:394-422. wileyonlinelibrary.com/journal/agr 394 |

Public Support of Private R&D–Effects on Economic Sustainability

“…Although the sample is still representative and results are externally and internally valid, some information might have been lost. As Dvoulety and Blazkova [65] propose, it would be good for the future to ensure that any program's applicants have a duty to report and provide data necessary for future evaluation purposes.…”

The Impact of Public Grants on Firm-Level Productivity: Findings from the Czech Food Industry

“…Given the fact that we lack good instruments for the IV's approach (e.g., applications scores), and we would like to assess the programme as a whole (not just firms above and below the threshold), we follow the PSM approach, which was for this purpose also recommended by the European Commission's representatives [86]. In line with the previously published studies, e.g., references [24,30,31,39,87], we combine the PSM approach with a difference in differences approach (DID), which takes into account changes in outcomes compared to the period before the intervention. The intervention took place during 2007-2013 and, thus, we consider as pre-treatment period the years 2005-2006 and post-intervention period the years 2014-2015 (two-year periods).…”

“…Moreover, it is worth mentioning that the share of the food processing industry on the value added to the whole Czech manufacturing industry was 7.5%, and on employment, it was 9.2% in 2016 according to the Czech Statistical Office (cf. Blažková and Dvouletý [39]). As technological innovation and upgrading are regarded as key aspects of catch-up for transitioning countries [45], the support policy should encourage innovation and technological upgrading, and spur regional development.…”

“…Despite the growing body of literature investigating the investment support policy contribution to competitiveness and efficiency of subsidised firms, e.g., references [21][22][23][24][25][26][27][28][29][30], the minority of studies focuses specifically on productivity effects, e.g., references [31][32][33][34][35]. The productivity assessment using only the labour productivity indicator, as common in a number of studies, e.g., references [25,[36][37][38][39][40], may bias the overall productivity effects. Bernini et al [32] argue that labour productivity may increase because of the capital deepening induced by the subsidy, whereas the efficiency of all inputs used may not increase at all.…”

“…Methodologically, we apply the propensity score matching approach (PSM) combined with a difference in differences approach (DID) based on the firm-level data accounting for 77.3% of all beneficiaries within the industry. In this study we build on prior research on the effects of EU investment support in the Czech agribusiness [39,40,52,53], which indicates overall positive impacts of investment subsidies on the financial performance of the supported enterprises. In contrast to previous studies that have in view only labour productivity as one of the performance indicators, we solely focus on productivity effects by employing more productivity indicators in one analysis, namely the production efficiency indicator, labour productivity and TFP, which increases the robustness of our findings.…”